Health Firm To Remain In City

Omnicare consolidates old NeighborCare offices

October 01, 2005|By JUNE ARNEY | JUNE ARNEY,SUN REPORTER

Omnicare Inc., the institutional pharmacy company that bought Baltimore-based competitor NeighborCare in July, will retain operations in Baltimore, officials said yesterday without disclosing many specifics.

"Omnicare intends to maintain a presence in Baltimore," said Andrew Brimmer, a spokesman for Omnicare, based in Covington, Ky. "We've been impressed with many of the people who've come to us from NeighborCare, and we've retained key management and other employees."

Brimmer said NeighborCare's former headquarters in the Power Plant has been consolidated at offices on Lee Street just west of the Inner Harbor. He declined to say how many people still work there.

Omnicare eliminated about 50 jobs at the Baltimore headquarters in August, but declined to discuss what would happen to the remaining 450 employees. Company officials declined to say yesterday whether there have been additional layoffs in Baltimore since that first round.

The company said it plans over the next 12 months to close 17 facilities, of which 15 are pharmacy operations. Overall, it plans to cut 730 jobs, or about 3.7 percent of the total work force. About 93 percent of the job cuts will be in pharmacy operations.

Company officials did not specify where job cuts will occur. Omnicare, a Fortune 500 company, operates in 47 states, the District of Columbia and Canada. "They're not detailing where the 17 facilities are, because it's a 12-month process," Brimmer said. "Not all the decisions are final."

Omnicare declined to say yesterday what would happen to roughly 30 retail operations that NeighborCare has in clinics and physicians' offices in the Baltimore area.

In a conference call with investors on Aug. 3, Omnicare chief executive Joel F. Gemunder said those operations accounted for 12 percent of NeighborCare's business. "We find these businesses interesting and are evaluating how they might fit in to our future plans," he said at the time.

Yesterday's news held no surprises for Frank Morgan, an analyst in the Nashville, Tenn., office of Jefferies & Morgan.

"From our perspective, it was exactly what we were expecting," Morgan said. "Part of the strategy of this transaction was combining pharmacy locations and being able to serve more beds out of one pharmacy location. It helps you drive down the cost of delivering the drugs."

Next year's new Medicare prescription drug benefit will be a chance for Omnicare to test out the power of the merged companies, Morgan said.

"Another potential benefit of this combined company is their ability to contract with PDPs [prescription drug plans] as we go into this new era with a Medicare drug benefit," he said.

Gemunder has said the company would "eliminate certain functional redundancies" as it absorbed NeighborCare, after the $1.9 billion acquisition.

"While the majority of consolidations will result in NeighborCare pharmacies being folded into Omnicare pharmacies, our review of the location, capacity and operating performance of all pharmacies has also identified certain Omnicare pharmacies for consolidation into NeighborCare locations," Gemunder said yesterday.

june.arney@baltsun.com

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